From Welfare to

Self - Employment

A guide for the woman who wants

to make a change in her life

Prepared by

Mary Morgan 275 East 28th Avenue, Vancouver BC

CANADA V5V 2M5 Tel/fax: (604) 215-2134

E-mail: mmorgan@economicsunplugged.com Webpage: www.economicsunplugged.com

For the

September 2003

Introduction Women want to work. We want to participate actively in the economy, make contributions to our society and provide for our children and families while living with dignity. But it is difficult to find work when the industries in our countries which have provided employment for decades are closing or moving to other parts of the world. In industrialized countries, there are varying degrees of safety nets. There is social assistance for people with disabilities and for those who are not able to participate in the mainstream because of lack of education and skills or even outright discrimination based on race, ethnicity, religion and that fact we are women. With the restructuring going on all over the world, our social services are being cut back and this is making us more and more vulnerable. In this current reality, more and more women see self-employment as their only option for being able to make the amount of money required to break the poverty cycle and provide for their families. Self-employment offers flexibility so that you can work hours that suit your health and family needs, it is a way to be your own boss and to start to take control of your life. For sure it is not for everyone, but it may be for you! This guide provides some instruction on what steps you could take to become self-employed. You will meet Angela and you will accompany Angela on her journey. There are worksheets for you to use to assist you in deciding if your business idea is going to work or not. When you see this picture, this indicates worksheets for you to fill out. Adjust it to your needs. Essentially, what you want to know is will your idea earn enough income for your needs. Don’t be nervous about the new words. You are probably managing your own budget and have a way better idea of how the economy works than you think you do! There is a Business Word Dictionary which provides simple explanations for the words so that you can build your own business vocabulary. So keep your eyes open for this picture: In many countries, if someone is on welfare, they are not allowed to earn extra money and each dollar that you earn may be taken off your welfare check. Or you may be lucky and live in a province or state which allows you to earn some money over and above welfare but you have to be involved in a special program before you can earn the extra money. And if you are on disability, you may be able to earn up to a certain amount before your benefits are affected.

The important thing is to talk with your social worker or your case manager and find out what is allowed. You do not want to put the security of yourself or family at risk and lose your benefits or be charged with fraud. Also, talk with an advocate or an ally who knows the system where you live about your plans and get their advice in how to go forward so that you won’t run in to problems later. Angela is a woman with a vision. She wants to change her situation and not be dependent on the State. You too have a dream. Test your dream out by following the steps in this guide and if it works, go for it! Many places do offer microenterprise development programs that offer business skill development, assist in finding start-up money and provide supports for business management. Ask your worker/case manager of state/provincial government information office to see if these services are available in your area. If there are, call and find out what the criteria is to participate to see if you are eligible. It is the hope of us all that have prepared this guide that you are able to use this material to make a positive and lasting change in your life. Your future depends on your own efforts to transform your reality. Good luck!

Table of Contents Page 1 Reviewing your skills! 1

2. Matching your skills to a business idea

3

3. Testing your business idea

5

4. Will enough people buy your product or service?

6

5. What are others offering?

13

6. How much do you need to make?

18

7. Take your business into the world!

28

Dictionary of business words 31

1 Reviewing your skills! Angela is a 27-year-old mother of two energetic young boys: Jonathan (age 5), and Justin (age 8). Angela lives in the city of Hope, in the working class neighbourhood where she grew up. She spends her free time (what little she has) with her mother and her good friend Sue. Last year, Angela decided to start her own business. Here’s her story:

It began when she got divorced. Her life changed in lots of ways, and it became harder for her to make ends meet. While she was with her husband, Angela had cared for her children, and had also worked part time at odd jobs to supplement her husband’s working wage. After the divorce, Jonathon and Justin continued to live with her, and the income from the odd jobs was not enough to support the family. Angela was relying on a combination of government welfare and child support payments to make up the difference. When both of her boys started school, Angela had some time during school days. She wondered how to find work that would pay enough to catch up on her bills and also leave her the flexibility she needed to be able to care for her children. One day when she was over at her friend Sue’s for lunch, Angela asked Sue for some advice and support in finding work. Sue asked Angela what job skills she had, and Angela had to think very hard; she didn’t feel very skilled at anything. “I have spent most of the last few years caring for my kids, keeping house and taking odd jobs like sewing, ironing and cleaning. I don’t have any job skills,” Angela moaned. Sue helped Angela realize that she just had to look at things differently and recognize that her experiences at home gave her lots of skills that could be useful. “Let’s go through what you do in a day and put a skill to the activity,” Sue said. Together they came up with this chart:

Activity Skill Prepare breakfast, lunch and dinner for her

family Cook Nutritionist

Take care of kids when they are sick Nurse Keep kids active and occupied Youth worker

Child Care Worker Sewing her summer clothes Seamstress Cleaning house Janitorial

Housecleaning Keeping track of the bills and paying everything Budgeting

1

Sue’s advice was great. Angela was amazed at all she knew and could do! But she was still worried about how to find a job, especially one where her boss would let her have enough time to take care of the children after school. “I need to be my own boss,” she moaned again. “Why not?” said Sue. So with Sue’s help, Angela decided to start her own business!

2

3

2. Matching your skills to a business idea To start a business, Angela needed to decide which of her skills she could use to earn an income. She went though the list of skills she had made with Sue and thought of some possible businesses. She put her business ideas

through a lens that looked at the following:

Having a skill and starting a small enterprise to earn some money requires some thinking and preparation. The first thing is to decide what to do!

• Her ability to do the activity. • Her resources, that is, whether she had adequate

supplies, equipment or machines to do the job effectively

• The compatibility of the idea with her family

Skill Ability & Resources Compatibility

Child Care + Love kids +Have toys for boys - Only have room for 3 kids during the winter

- Jonathon and Justin would be jealous

Seamstress + Feel comfortable making summer dresses + Have a machine - Could only do summer clothes for women - Machine is old and could only sew cotton - The sewing machine is used in the living room and takes up lots of space

+ Hours would be flexible

Housecleaning + Enjoy seeing the results of her work + Could do it during school hours + Have house cleaning supplies & equipment - Don’t have a car to transport equipment & supplies

+ Work during school hours

And the winner is…Housecleaning! Angela realized she had the skills and resources to carry out housecleaning and it would not interfere with her family obligations. Now she could go forward!

TASK: Take a moment to do what Angela did, to decide what business idea you want to research further

What Activities do you do in a day? Name the skill attached to the activity

Pick the three activities and skills that you do the best from the list above and fill out the chart below. Be sure to list both pros and cons, so you can decide which idea works best for you.

Skill Ability & Resources Do you have equipment,

machines, space in your home, etc.

Compatibility Hours flexible enough? How would your family

feel?

+ or -

1.

2.

3.

Idea to go forward with___________________________________

4

3. Testing Your Business Idea

A few days later, Angela hooked up with Sue for coffee. ”Well I’ve decided that I am going to look

into seeing if I can offer housecleaning services to try and earn some money,” she said.

You might have a great idea that fits well with your skills and is something you really enjoy doing but if there is no need for what you are offering, you won’t make any money. Trying your product or service out on one or two customers is one way to TEST your business idea.

Sue was excited for Angela. She even had an idea for a customer! “You will never believe this, but my friend Rika has recently found a full time job, and she’s been talking about how impossible it is to keep up with her kids, the housework, and her job. I’m going to introduce you two and maybe you will have your first customer. When can you meet her?” “As soon as possible!” Angela answered gleefully. Sue brought Rika and Angela together. Since Rika was a good friend of Sue’s, and Sue gave a good reference for Angela, Rika felt comfortable offering Angela the housecleaning job. Rika wanted her 2-bedroom house to be dusted and vacuumed, and the bathrooms and kitchen cleaned. She thought it would take about three hours, and she would pay $60.00 per visit. Angela would clean Rika’s house while Rika was at work, using Rika’s cleaning supplies.

Angela’s earnings at a glance:

Cash in: 3 hours of work $60.00 Cash out: Transport (to and from) - 4.00 Bus fare Cleaning Supplies - 0.00 Using Rika’s supplies Total earned for 3 hours = $56.00 TOTAL EARNED FOR ONE HOUR ($56.00 ÷3 hours) = $18.66 / Hour

Before Angela goes off welfare, she wants to make sure that

she will make enough money to support herself and her family.

5

4. Will enough people buy your product or service?

Rika was so happy that she could spend her free time with her family that she recommended Angela’s services to other women in her office. Angela got 3 other calls asking her to do housecleaning! Because of the phone calls she got from Rika’s work mates, Angela knew that other people were interested in her housecleaning services. That was only one office, and she thought there might be other places where she could find people

who would pay for her housecleaning. Angela needed to know how many people would be willing to pay for this service. In business language, these people are called your market. Angela also needed to know what kind of people would pay for her service, so she could focus her promoting efforts on that group. These people are called her target market. To help her figure out exactly who her market would be, Angela needed to find out more about her potential customers. For example, Angela needed to find out what kinds of services Rika’s workmates and others really wanted, how often they would need her and what they would be willing to pay. This is called market research. Angela decided to begin her market research by talking to potential customers and asking them about themselves, and

what services they needed. Angela needed to answer these questions for herself:

A successful test does not mean that the business will be able to support you and. Now you have to figure out if there are enough people who will buy your product or service to provide you with sufficient income to maintain your family.

Dictionary of Business Words

Market: All your current customers and your potential customers Target Market: The specific part of the population who want your product or service. Market Research: Asking questions and gathering information to learn about the needs and preferences of your potential customers.

Do people want my service? What kind of people want my service? What do they want included in the service? What will they pay for my service? How often do they need my service?

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To conduct her market research, Angela made up a set of questions; this is called a questionnaire or survey. Angela’s simple survey: 1. Name of person surveyed: 2. Are you interested in getting your house cleaned by someone? Yes No If yes: 3. How many rooms does your home have? 4. How much would you pay for housecleaning? 5. How many times a month would you want your house cleaned? 6. If yes, what would you like done in your house? Vacuuming Dusting Windows Kitchen floor Bathroom floor Oven Cupboards Other What area do you live in? Other comments: With her list of questions ready, Angela began phoning back the women from Rika’s office who had called her. She felt comfortable with them and found it easy to fill out three surveys. She then felt confident and asked them if they knew of any other people who might be interested in her service. She got another eight names and she called them. Encouraged by the response, Angela interviewed other potential customers including: Working parents dropping their kids at the neighbourhood daycare Professionals on their lunch break at the food court in the mall Seniors at the social drop-in at the community centre

After a couple of weeks Angela had interviewed and chatted with 50 people! Here are her results: Total # surveyed: 50 45 working women 5 men# Interested in the service: 35 # Not interested in the service: 15 How many rooms do you have, how much would you pay for the service and how many times a month would you want the service? # Of Respondents

# Of rooms $ They would pay

# Of times they want the service

12 1 bedroom $50 Twice a month 8 2 bedroom $50 Twice a month 7 2 bedroom $60 Twice a month 3 1 bedroom $30 Every week 5 3 bedroom $70 Twice a month

7

Cleaning wanted done: Vacuuming: 35 Dusting: 35 Cupboards: 5 Windows: 10 Kitchen floor: 25 Bathroom floor: 32 Oven: 10 What area do you live in? 30 live in Lower Heights 12 live in Midtown, where Angela lived 8 live in Sunny bank Other comments: 2 would like gardening done in the summer 5 would like spring cleaning done with the windows and kitchen cupboards cleaned 4 would like help with getting the house ready for winter 35 were women working in offices downtown Most of those who said yes had children in school.

Angela’s Analysis: According to the survey results, the potential was there for Angela to earn some money!

# Of Respondents

# Of rooms $ They would pay

# Of times they want the service

Total $ Amount/month

12 1 bedroom $50 Twice a month = $1,200 8 2 bedroom $50 Twice a month = 800.00 7 2 bedroom $60 Twice a month = 840.00 3 Studio $30 Every week = 360.00 5 3 bedroom $70 Twice a month = 700.00 The customers Angela called were mostly working women. Their children

were older so the cleaning would be easier. Angela decided her target market was working women. To reach her customers, Angela would have to advertise where office women go, for instance at daycares and schools where they drop off their children, or places they have lunch.

Angela would need to organize her service schedule according to how many

times people wanted the service and where people lived. This would help her be more efficient in her service delivery.

Angela would need to work out how many hours each task would take

and come up with a price list for her services. For example: o Rika’s house was a 2 bedroom. o It took Angela three hours to vacuum, dust, and clean the kitchen

and bathrooms including the floors.

8

When she worked for Rika, she got $60 per three hours of work. Her work for Rika would help Angela decide what to charge per house and per activities.

Judging by the survey, there was opportunity to expand Angela’s business

idea to include spring-cleaning, gardening, and getting the house ready for winter. Angela could include some other services to give her business an edge over other housecleaning businesses.

9

TASK: Take a moment to design your customer survey and decide where you are going to go to do your interviews. Use this form to start.

ake a moment to design your customer survey and decide where you are going to go to do your interviews. Use this form to start.

Name of person interviewed: Name of person interviewed: Where do you live? Do you use today? (Name your product or service) If not, would you be interested in using it today? How much would you pay for Name the product or service How many times would you use Name the product or service Week/month/year depending

on what you are selling What sort of other things would you like to see with this product or service which would make you more interested in paying for this product or service? Adjust the survey to your needs!!!!! Remember, just like Angela’s survey, your survey results should be able to:

√ Describe your customers by sex, age, and background √ Tell you what kind of product/service your customers want √ Tell you what price range your customers will pay √ Give you an idea if there is enough interest in your product or

service for you to start a business, and what price people are willing to pay.

Test your survey out with a friend or your kids. If you already know someone interested in your product or service start with him or her, and follow what Angela did. Remember to ask this person if he or she knows of anyone else who would be interested!

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Some tips when you interview people:

1. Prepare a short introduction to guide you when you do your first interview

Let people know why you want to ask them some questions. “Hi, I’m thinking of starting a small business and was wondering if you had a couple of minutes to answer somquestions….”

i, I’m thinking of starting a small business and was wondering if you had a couple of minutes to answer somquestions….”

e e

2. Make it the right length 2. Make it the right length The length is dependent on where you

are asking the questions. A survey on the street or in a store should only be a few questions long, a survey over the phone or in someone’s home can be longer and more detailed

The length is dependent on where you are asking the questions. A survey on

the street or in a store should only be a few questions long, a survey over the phone or in someone’s home can be longer and more detailed

You may not have time to get an answer to every question you have, so start with the most important and relevant questions

You may not have time to get an answer to every question you have, so start with the most important and relevant questions

When you think you are ready, survey one or two people you know, to make sure that your questions and instructions are clear. You can also see how long the survey takes to complete.

When you think you are ready, survey one or two people you know, to make sure that your questions and instructions are clear. You can also see how long the survey takes to complete.

If necessary, make changes to your questions before you go out and do more.

If necessary, make changes to your questions before you go out and do more.

3. Make sure the questions and the instructions are clear 3. Make sure the questions and the instructions are clear

Keep the questions short and easy to understand Keep the questions short and easy to understand Ask for only one piece of information in each question Ask for only one piece of information in each question Keep your audience in mind when writing your questions.

Are they already familiar with similar products or services? Are you using jargon they might not understand?

Keep your audience in mind when writing your questions. Are they already familiar with similar products or services? Are you using jargon they might not understand?

4. Make sure the questions are not leading to a specific answer 4. Make sure the questions are not leading to a specific answer

Keep the language of the questions simple Keep the language of the questions simple Do not try to influence the answer to the question in any

way. You want to get a true idea of what your market wants! Do not try to influence the answer to the question in any

way. You want to get a true idea of what your market wants! Do as many surveys as you can, to get a realistic picture of who Do as many surveys as you can, to get a realistic picture of who your customers might be, and what their needs and wants are. This information will help you tailor your products and services to meet their needs, for as many sales as possible!

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5. What are others offering?

When Angela was doing her surveys, she heard from some people that she surveyed that they

already had a housecleaner. This made Angela curious. What price did the other housecleaners charge? What sort of cleaning services did they offer? Angela started to think about what could she do differently from the other cleaners that could give her more customers.

There is always someone else out there doing what you want to do. You can learn lots from them, which will help you service your own customers better! Offering the best service possible for the best price will help you get more sales. Let’s learn how to do that.

Dictionary of Business Words

Competition: Others who are offering the same service or product.

Others who are offering the same product or service are called competition. Learning about your competition’s service and product can teach you what your market wants. Remember, market research is what you do to find out about your market. Learning about

what others are offering can teach you about what you target market wants. Who else offers this service? To find out about her competition, Angela began by looking up “house cleaning” in the neighbourhood newspaper. Then she looked for notices on bulletin boards at the laundromat, in apartment buildings and on telephone poles. Basically she looked wherever there were advertisements. She found 5 ads for housecleaning in her neighbourhood. Just from reading these advertisements, Angela found out:

Price of the service is quoted by the hour The advertisements were simple and not well written and did not look

professional All were offering to work in the neighbourhood

Angela wanted to find out more! So she put on her detective hat, pretended that she was a potential customer, and called up her competition!

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Angela prepared herself by making up another set of questions. She wanted to find out the following about her competition:

What days of the week do they offer the service? What sorts of things do they clean? What is the price range for a 1 bedroom, 2 bedroom

and 3-bedroom house? Do they use their own equipment and supplies? Do they have references she can check?

Preparing to make the calls Angela was nervous about calling the competition, so she made sure that she was comfortable. She made herself a cup of coffee and cleaned off the kitchen table. She got herself a pad and then took some deep breaths. When she felt ready, she made her first call. “ Hi, I saw your ad offering housecleaning and I’m looking for someone to clean my house. I’m just checking around to see who can do it for the price that I can pay. Got some time for a couple of questions to help me make my decision?” The first interview was great. She got a couple of answering machines where she left a message asking the woman to phone her back. Over a couple of days, Angela got results from all the ads she responded to. She even called the cleaners’ references, to see if their current customers were happy with the work. Results from Angela’s Competition Survey:

Days they offer the service: 5 Monday – Friday 2 on the weekends 2 started at 8:00 AM

What they clean:

Vacuuming and dusting house – 5 Bathroom and kitchen – 5 Laundry – 2 Clean oven - 1

Cost of service 1 bedroom 2 bedroom 3 bedroom 2 at $20

3 at $30 3 at $40 2 at $50

4 at $60 1 at $70

Number of hours 5 took 2 hours

3 took 2.5 hours 2 took 3 hours

4 took 4 hours 1 took 5 hours

Use their own equipment & Supplies

Yes - 1 No - 4

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Angela asked the cleaners she called for references, and phoned 5 of their current customer, still pretending she herself was a customer. She explained to the references that she was looking for a housecleaner and that she was checking with them to see if they were happy with the service. This is what she learned: Really happy with the service 5 Felt the price was right for the service 3 said yes

2 said that it should be more Would not change to another cleaner 5 – they really trusted the

cleaner and could give them keys and let them be in the house when they were not there.

Angela’s Analysis: This is what Angela learned from surveying the competition:

Using customers’ cleaning equipment and supplies was ok. Knowing this would keep Angela’s costs down, because she would not have to transport her own equipment in a taxi.

Her competition was able to

clean faster than Angela. The average competitor could clean a 1 bedroom in 2 hours and a 2 bedroom in 2.5 hours. Angela took 3 hours to do a 2 bedroom. Angela would have to learn how to be more efficient in cleaning houses. She decided this would come with practice.

Offering to start cleaning at 8:00 AM was one way to get an edge in

the cleaning business. But Angela also needed to make sure that her children would get off to school at around that time, so starting early might not be possible.

All of the competition had been cleaning for more than 3 years.

Angela did not have a track record, and it might be difficult to get her own clients.

Trust was very important to customers. Angela learned she should

start with people she knew, so that they could be a reference for other people.

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TASK: Take a moment to design your own competition survey and decide who you are going to call. Use this example to make your own

survey chart.

Name & phone

number

Price What do you get for the

price?

Guarantees? Other?

Get a list of your competitors. Depending on your product or service, you might look in the following places:

Local newspapers Bulletin boards Yellow pages Internet Magazines Any other source which advertises businesses

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Make yourself comfortable to call up competitors pretending to be a customer.

1. or

Comfortable Stressed

2. Add up your results.

Analyze the information you have gathered.

3.

What can you learn from the information that you have gathered to make your product or service better?

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6. How much do you need to make?

Angela came in from running some errands and picked up the mail. She dropped everything on the kitchen table and began opening up the envelopes.

Two were bills; one from the phone company, to be paid in 9 days and one from hydro, to be paid in 7. Angela only had enough money to cover the phone bill because she had bought school

supplies for her kids. Another envelope contained a note from the cable company saying they had disconnected her cable

because she had not paid in three months. Angela knew that Jonathan and Justin would be disappointed that they could not watch their favourite TV shows. Now more than ever, Angela knew she had to get going with her business idea. “How much do I need to earn so this won’t happen to me again?” she wondered. And then she sat down to figure it out. First Angela listed all her living expenses. Living expenses are the bills you need to pay to keep your household running. Angela’s list looked like this:

Date Due Item Week Month 1st Rent $525.00 Food for 1 adult – 2 boys $85 X 4 = $280 Medicine $85 Clothes $100 24th Telephone $35 22nd Hydro $75 winter/$35 summer School extra curricular $50 Total per month $1,192.00 winter $1,152.00 summer

Getting out there to research the market gives you important information about what customers want. The next thing is to figure out how much money you yourself need to cover your living expenses and business expenses. Knowing this helps you decide how much you should charge for your product or service.

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Next, Angela listed her business expenses, all the expenses related to her business idea. First she listed all the expenses she was going to have to get her business off the ground. These are called her start up costs. For Angela’s business, start up costs include:

Dictionary of Business Words

Start-up Costs: Things you have to pay for to get your business up and running. Operating Costs: Things you have to pay for to keep your business running. Variable Operating Costs: Things you pay for that are linked to the amount of sales. If sales go up, then these costs go up. Fixed Operating Costs: Things you pay for that stay the same no matter how many sales you have.

Business cards and an ad to promote her service to her target customers

Office supplies – like paper, envelopes, folders, receipt book

Filing cabinet to keep track of her business papers. Start up Costs Business Cards $20 for 150 Ad in Women’s Business

Association Newsletter $25.00

Office Supplies – paper, folders, $32.00 envelopes, receipt book Filing Cabinet $29.00 Total Start-up Costs $106.00 Next, Angela listed the expenses she would have on a regular basis that were connected with her business. These are called her operating costs. For Angela’s business they included:

Transportation costs Her own labour Bank fees Ongoing promotional costs

Angela started to think: “If I start off with 5 customers a week, my transportation and labour costs will be more then if I only have 3 customers in a week. That means that some of my costs are linked to the number of sales I have in a week.” In business terms, these costs that change with sales are called variable operating costs. The costs that stay the same no matter how many sales you have are called fixed costs. Angela took this idea a bit further. “If I have to pay two dollars every time I get on the bus, and I get five jobs a week, it will cost me $80 a month in bus fare. But if I buy a bus pass, which costs $55 a month, I could save $25, or even more, depending if I get more than 5 jobs a week!” GOOD IDEA ANGELA! Buying a bus pass would also change her transportation costs from a variable cost to a fixed cost.

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It is important to pay yourself! But remember that your earnings depend on what your sales are. If you don’t have sales, then you can’t pay for your labour. This is a variable cost!

In the end, Angela’s operating costs looked like this: Angela’s Operating Costs Week Month Fixed Operating Costs Bank Fees $2.50 per month Bus Pass $55.00 Total Fixed Operating Costs $57.50 Variable Operating Costs Angela’s Labour @ $12 per hour $180.00 X 4 = $720 5 Customers X 3 hours per customer) X 12.00 per hour Promotion ad in Women Business $10 Association newsletter Total Variable Operating Costs $730 TOTAL OPERATING COSTS $787.50

Angela then calculated how much she needed in sales to cover her living expenses and her fixed operating costs. If she could not cover her living expenses and her fixed operating costs, then it would not be worth going into business. This is called a break-even point. (Living Expenses + Fixed Operating Expenses) = $1,192.00 + $57.50 = $1,249.50

So Angela needed to earn $1,249.50 per month in order to break even! Setting your price requires that you know what your business costs are, what your earning needs are and also what your target market (customers) will pay. Angela thought she had all this information now, so she could figure out how much to charge. She got out her pencil and paper again and reviewed the work she had done to date. She knew:

It took 3 hours to clean Rika’s 2-bedroom house for $60. She did that every 2 weeks. So for one customer she was making clear $120/month for 6 hours of work

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In her market research she learned that one third of the respondents would pay $50 for a one bedroom; and only one fifth would pay $60 for a 2 bedroom. (See chart page 8)

Angela also knew:

She needed to earn at least $1,300/month And by calling the competition she found out that he going rate was:

o $30 for a studio apartment and that would take about 2 hours o $50 for a one bedroom and that would take about 2.5 hours o $55 for a two bedroom and that would take 3 hours o $70 for a three bedroom and that would take about 3.5 hours

Angela figured out that if she charged the going rate, it would cover her business expenses. Angela made some sales estimates based on her research and plugged in the business cost numbers to see how she might do in the first month. “Working with numbers is not my strength, but now that I know what I will charge, I can check out different scenarios,” she said to herself.

Scenario #1 Total Week 1 Week 2 Week 3 Week 4 Month INCOME 2 bedroom 3 X $55=$165 2 X $55=$110 3X$55 = $165 2 X $55=$110 $550 1 bedroom 4 X $50 =$200 2 X $50 =$100 4 X $50 =$200 5 X $50 = $250 $750 3 bedroom 1 X $70 =$70 1 X $70 =$70 1 X $70 =$70 1 X $70 =$70 $280

A) TOTAL SALES

$435 $280 $435 $430 $1,580.00

Now, list Angela’s business expenses and

then add each week up BIZ EXPENSES Transport $55 $55 Bank Fees $2.50 $2.50 Business Cards $20 Ad in Newsletter $10 $10 Office Supplies $32.00 $32 Filing Cabinet $29.00 $29 B) TOTAL EXPENSES $75 $61 $10 $2.50 $163.50

Now let’s see how much money Angela actually makes by subtracting expenses from sales. And carry it over to the next week, so she can see how much she has each week.

A) Sales - B) Expenses

$360

$219

$410

$427.50

$1,416.50

$ Beginning of week + +$360 + $579 +$989

$ End of week =$360 = $579 =$989 = $1,416.50

Don’t be nervous! First, list the “projected” income from Angela’s sales per week and then add each week up

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From her cash flow chart – which is a tool that shows all your income, all your expenses and if you are making money or losing it − Angela’s business looked great. She was very excited. “Awesome! I can make $1,4126.50 a month. I’ll ba rich woman before I kno

e w it!”

Then Angela realized it looked too good. She wondered if there was anything she had left out. “I’m going to include my living expenses, because I have to make enough money to cover my living costs. I’ll just follow the same process but include my living expenses separately, after my business expenses.”

Month: Total for Week 1 Week 2 Week 3 Week 4 Month INCOME 2 bedroom 3 X $55=$165 2 X $55=$110 3X$55 = $165 2 X $55=$110 $550 1 bedroom 4 X $50 =$200 2 X $50 =$100 4 X $50 =$200 5 X $50 = $250 $750 3 bedroom 1 X $70 =$70 1 X $70 =$70 1 X $70 =$70 1 X $70 =$70 $280

A) TOTAL SALES

$435 $280 $435 $430 $1,580.00

BIZ EXPENSES Transport $55 $55 Bank Fees $2.50 $2.50 Business Cards $20 $20 Ad in Newsletter $25 $25 Office Supplies $32 $32 Filing Cabinet $29 $29 LIVING EXPENSES

Rent $525 $525 Food $70 $70 $70 $70 $280 Medicine $15 $25 $30 $15 $85 Clothes $25 $25 $25 $25 $100 Telephone $35 $35 Hydro $42 $42 School extra curricular

$25 $25 $50

B) TOTAL

EXPENSES $735.00 $181.00 $175.00 $189.50 $1,280.50

A) Sales - B) Expenses

(-$300.00) $99.00 $260.00 $240.50 $299.50$ Beginning of week

+ +(-$300.00

)

+ (-$201.00)

+$59.00

$ End of week =(-$300.00) =(-$201.00) =$59.00 =$299.50

“Yikes! Most of the month I am operating with not enough money, and at the end of the month I will not have enough to pay my rent the first of the month!”

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Often when you put pen to paper and start to “crunch numbers,” it does not look good. But don’t give up! The important thing is to be realistic, and to not get in trouble later on because you do not have enough money to survive. Angela should not give up her idea!

Angela was disappointed, but she held on to her idea. She called up Sue and explained what she had been doing, Sue said, “Let’s do a little brainstorming to figure out how you can come out with more money in your pocket and a bigger cushion to absorb any extra expense which may pop up. We all know that when you have kids, extra things always come up!” Here are some of the ideas Angela and Sue had: 1. Increase sales Angela had interviewed 50 people, and 35 of them said they wanted a housecleaner. She could start by calling them back and seeing if they wanted her services. She could make sure that she had more than 5 customers a week so that she could earn more than $500 a week. She could only work 6 hours a day if she wanted to be home for her kids, so she would have to clean at least five 2 bedroom homes, and then 5 -bedroom homes. 2. Decrease business costs. “You already have some office supplies,” said Sue “Enough for the first month of starting your business.” So Angela could hold this cost off to the next month.” And you can wait to buy a filing cabinet. That will reduce your costs for the first month by $61.00.” Angela realized that if she went back to the people she had surveyed, she would not need to promote her services until the second month. This way she will get sued to the routine with people she already has had contact with and she will be better prepared to take on new clients. 3. IF Angela starts her business in week two of the month, she can use her last welfare payment to pay for her rent. This will give her a chance to have the $800 as a savings to take in to month two.

These are great ideas!

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Angela went back to her numbers and changed them to reflect the advice she was given. And good thing she did, because this is what her new numbers looked like!

It is really important that you take the time to see if you can make enough money to support your family and cover your business expenses before you go off welfare. Make sure that you have access to an ADVOCATE or ALLY who you can trust and can provide good feedback and advise before you launch your business.

Month: Month: Total for Week 2 Week 3 Week 4 Week 1 Month INCOME 2 bedroom 5 X $55=$275 4 X $55=$220 5X$55 = $275 4 X $55=$220 $550 1 bedroom 5 X $50 =$250 3 X $50 =$150 5 X $50 =$250 3 X $50 = $150 $750

A) TOTAL SALES

$525 $370 $525 $370 $1,790.00

BIZ EXPENSES Transport $55 $55 Bank Fees $2.50 $2.50 Business Cards $20 $20 Ad in Newsletter Office Supplies Filing Cabinet LIVING EXPENSES

Rent $525 $525 Food $70 $70 $70 $70 $280 Medicine $15 $25 $30 $15 $85 Clothes $25 $25 $25 $25 $100 Telephone $35 $35 Hydro $42 $42 School extra curricular

$25 $25 $50

B) TOTAL

EXPENSES $212.50 $120.00 $227.00 $635.00 $1,194.50

A) Sales - B) Expenses

$312.50 $250.00 $298.00 (-$265.00) $595.50$ Beginning of week

+ + $312.50 + $562.50 + 860.50

$ End of week =$312.50 = $562.50 =$860.50 = $595.50

Reflections on our learning about “crunching” numbers.

1. Figure out your living expenses. You are going to be self-employed and start a business to earn a livelihood, not a deadlihood! Take in to consideration the fluctuations of your bills according to seasons. For instance in the winter your hydro bill is usually more because you have to pay for heating!

2. Figure out start up costs for your business. Every business is different. If you are in to production, you may need to purchase equipment or supplies. Angela has a service and does not require much for start up.

3. Figure out your business operating costs; the costs which occur to run your business. Remember some fluctuate with your sales and they are variable costs and some are not affected by your sales and they are fixed.

4. Figure out your break-even point which is the minimal amount you need to make in order to cover all your costs. Once you achieve earning that amount in sales, it becomes your profit, which is the money left over after you have covered all your expenses.

5. Set your price! This will depend on how much it costs to run your business and what your research says about what your target market can pay.

6. Crunch your numbers and produce a cash flow chart! Lay out your sales predictions based on your research and then your business expenses for each week and then your living expenses. This is an invaluable tool that can help you to analyze your financial situation.

7. Make decisions based on the results of your sales predictions and your expenses. Be realistic, and don’t be afraid to crunch your numbers a couple of times. Make sure you have a quite time to do this!

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TASK Now it is your turn to crunch your own numbers and make a cash flow chart! It is really important that you make sure you have some quiet time, a calculator, and a pencil to fill in

these worksheets. Your Living Expenses Date Due Item Week Month Rent Food Medicine Clothes Telephone Hydro School extra curricular Total per month Your Start-Up Costs Items Cost Business Cards Total Start-up Costs

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Your Operating Costs Cost for Cost for Item Week Month Fixed Operating Costs Bank Fees A) Total Fixed Operating Costs Variable Operating Costs B) Total Variable Operating Costs TOTAL OPERATING COSTS = A+B Your Break-Even Point

Living Expenses + Operating Expenses = + =

If you are having problems, refer to Angela’s worksheets!

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Your Cash Flow Chart

Month: Total for Week 1 Week 2 Week 3 Week 4 Month INCOME

A) TOTAL SALES

$

BIZ EXPENSES Bank Fees LIVING EXPENSES

Rent Food Medicine Clothes Telephone Hydro School extra curricular

B) TOTAL EXPENSES

$

A) Sales - B) Expenses

$

$ Beginning of week

+ + + +

$ End of week =$ =$ =$ =$

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7. Take your business into the world!

After all the number crunching,

Angela had done her work.

After coming up with your idea, testing it, doing market research to find out what your customers want and then crunching numbers to make 100% sure your idea is going to be successful, you are ready to get out there!

She knew the possibilities in the market for her housecleaning idea and had a pretty good idea about how much money she could make! Now she had to put together a description of her business that would make it easier for her to attract customers. She needed a clear business description with the following:

What she was offering To whom Where she would offer it When she would offer it How much she would offer it for

After a couple of tries, she came up with a paragraph that explained exactly what she was offering. She was so excited that she gave Sue a call. “Hey Sue, I’ve got it! Here is what my business is all about! What do you think?””

Spend your precious free time on the things that give you enjoyment and let Clean Sweet Home take care of the cleaning! I offer a wide variety of quality home cleaning services to working families and women professionals in the residential areas of Lower Heights and Midtown here in the city of Hope. While you are at work, your home gets sparkling clean! Rates are $50 for 1 bedroom home, $55 for a 2- bedroom home and $70 for a 3 bedroom. Service is personalized by using the preferred cleaning products of the customer. References available.

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Sue was amazed.“ Angela, this is awesome! Just a couple of weeks ago you didn’t even think you could do anything. You go Girl!”

Angela did it, and you can too!

Start with your skills, imagine an idea, and

then do what Angela did,

one step at a time!

GO FOR IT!

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TASK One last thing — Take the time to develop your business description so you can go out there and get your customers!

My Business Description

What are you offering Who - describe your target group

Where are you offering your product/service?

What are your hours? How much are you charging?

Make your business sound interesting. You want customers, and this is the first contact many of your potential customers are going to

have with you! Read the description to your friends so you can get suggestions before you print it up

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Dictionary of Business Words

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Break-Even Point When your sales cover your living expenses and your

fixed operating costs. Anything else above this is your profit.

Cash Flow Chart A tool that shows all your income, all your expenses and if your making money or losing it.

Competition Other businesses that are offering the same, or very similar, service or product as yourself.

Fixed Operating Costs

Things you pay for that stay the same no matter how many sales you have.

Living Expenses All the costs to run your household and live your life. Market All your current customers and your potential customers Market Research Activities you do to gather information to learn about the

needs and preferences of your potential customers. Operating Costs: Things you have to pay for to keep your business

running. Profit The money you make from your sales after all the

expenses are paid. Start-up Costs Things you have to pay for to get your business up and

running Target Market The specific part of the population who want your

product or service. Variable Operating Costs

Things you pay for that are linked to the amount of sales. If sales go up, then these costs go up.